OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to positive from stable and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” for Center Mutual Insurance Company (Center Mutual) (Rugby, ND).
The outlook revisions to positive are a reflection of the company’s solid risk-adjusted capitalization and historically favorable operating performance. Center Mutual has been able to add to surplus in four of the past five years, mainly driven by profitable underwriting income combined with a steady stream of net investment income. The company’s five-year average combined and operating ratios outperform the private passenger standard automobile and homeowners composite. Additionally, loss reserves continue to develop favorably and underwriting leverage ratios are below composite averages.
Partially offsetting these positive rating factors is the company’s geographic concentration in North Dakota. While Center Mutual also writes in South Dakota, the business is light and highly concentrated in the northern section closer to the state line. Underwriting results were adversely affected earlier in the five-year period by frequent and severe weather-related events. Center Mutual mitigates this risk by conservative use of reinsurance and strict risk management exposure.
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